Yell slumps into £1bn-plus loss

With the group's core print directories failing to cope with the surge of online activity, revenues from print and other directory collapsed 21 per cent over the year to £1.15bn. Plans to mitigate this decline with digital revenue have been delayed as a number of new projects have taken longer than expected to come to market. And, while digital services revenues – which include accounting and payroll software – doubled to £134m, this segment accounts for less than 10 per cent of group turnover. Moreover, these revenue gains were completely offset by a 15 per cent fall in income from digital directories.

To address the problem, management has slashed more than £200m off costs and reduced borrowings by £565m. However, while the group is currently operating within its banking covenants, poor trading and greater reliance on income from unproven strategies means the risk of a breach has increased. Management has appointed advisors to create a new capital structure for the group by the year-end, but with the shares at an all-time low existing shareholders are facing massive dilution.